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In the Spotlight: Chris Mitrothanasis

Recently appointed Senior Director – Government & Advisory, Chris Mitrothanasis currently leads Opteon’s Government services teams in NSW, QLD, NT and WA. The teams specialise in government sector-specific valuation and property advice across all asset classes for Federal, State and Local Government and their agencies.

A Fellow member of the Australian Property Institute (API) and Certified Practising Valuer with over 26 years’ experience within the property industry, Chris has worked in various leadership roles throughout his career. Today we delve into his progressive career journey.

Getting a taste of the property

Chris Mitrothanasis at Opteon's 2018 Conference

Chris Mitrothanasis at Opteon’s 2018 Conference. Photo credit: Jon W / Event Photos Australia

industry early on

Chris developed a keen interest in the property industry from a young age, having been introduced to the industry through family and friends represented in the real estate and construction industries.

During high school he worked at the local real estate agency as an office assistant. While completing his HSC, his mentor at the time suggested he undertake the Property Economics course at the University of Western Sydney. Great advice!

Growth and Leadership Accomplishments

Chris started out as a Cadet Residential Valuer in 1996 after completing his Bachelor of Commerce (Land Economics) Degree at the University of Western Sydney. Working for boutique property firms, he experienced rapid career progression over the next several years, developing technical skills and expertise in the Commercial, Residential and Government sectors.

Joining Opteon in 2013 as Director of Commercial, Chris established a Commercial/Government Department within the Sydney office. With the successful growth and expansion of the team across the Sydney metropolitan as well as regional areas, Chris was promoted to NSW State Regional Director (Commercial, Agribusiness & Government) in 2015.

Chris Mitrothanasis with Duncan Cameron

Chris Mitrothanasis with Duncan Cameron, Executive Director and Director – Specialised & Advisory. Photo credit: Jon W / Event Photos Australia.

Over the next seven years, the team continued to smash goals under his leadership, expanding rapidly and diversifying their core business offerings to cover Core Commercial, Alternate Assets/Middle Markets, Agribusiness, and Government Advisory. Chris says,

“As a leader, seeing my peers reach their goals gives me a sense of accomplishment.”

Government Expertise

Chris is well versed in the Government and Advisory sectors, managing various large-scale government and non-government projects and portfolios. He specialises in compulsory acquisitions and financial reporting valuations across Local, State, and Federal Government clientele. He has undertaken multiple complex compulsory acquisition valuations and mediations for both the resuming authorities and dispossessed owners.

Chris presenting on valuation topics

Chris presents regularly to clients and staff on valuation topics.

With strong leadership acumen and technical expertise spanning across a broad range of property sectors, he is regularly commissioned to undertake Government, Commercial, Retail and Industrial rental determinations on behalf of the API and multiple Government and Non- Government bodies.

Contributions to Industry

As an industry leader, Chris holds deep-seated passion for the Valuation and Property industry and genuinely enjoys giving back to the property community.

Chris is an API NSW State Committee member, providing critical guidance and intuitions into various issues arising or confronting the industry. He also serves the API as member of the CPD Committee, advocating for continuous professional development, event participation, and maintenance of professional standards.

Chris speaking at Opteon's Property Breakfast in 2020

Chris speaking at Opteon’s Property Breakfast in 2020

With a penchant for public speaking, Chris has hosted and presented at full house events and webinars, sharing insights and expert knowledge with peers and clients.

Motivation

Chris is involved with various graduate mentoring programs and projects, providing mentorship, and coaching to Opteon’s graduates and future leaders, helping them to achieve their qualifications and career goals.

“You never stop learning in the valuation industry. My biggest motivation at this stage of my career is to see the new generation coming through the ranks, witnessing the growth of our graduates, cadets and assistants, whilst ensuring we are expanding pathways for our teams in their career advancement.”

Recent article

Click here to read Chris’s overview of the Rise of Alternative Real Estate.  In this article, Chris examines a range of factors, including compressing yields, that are contributing to individual and private investors increasingly turning their attention to alternative real estate assets – particularly in the petroleum and childcare asset categories.

CONTACT

Chris Mitrothanasis

Chris Mitrothanasis

Senior Director – Government & Advisory (NSW QLD NT & WA)

How to get in touch

For more information about Opteon’s Government and Advisory services, click here for Government and here for Advisory.

To get a quote, contact us via the below form, or on 1800 40 50 60.


DISCLAIMER

This article is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax or financial advice.

Liability limited by a scheme approved under Professional Standards

Caravan Park

The Call of the Caravan Park

Author

Ryan Danaher, Opteon Head of Department – Alternate Investments

According to IBIS[1], the Caravan Parks, Holiday Houses and Other Accommodation sector is worth $4.5bn. It grew in market size by 13.9% in 2022 and enjoyed an annualised market size growth of 1.5% between 2017-2022.

Why has there been such strong growth?

There’s no doubt COVID-related travel and lockdown restrictions have fuelled growth in this sector. Many Australians who had accrued savings and annual leave while being cooped up throughout lockdowns and border closures have embraced holidaying options closer to home. Demand is so high that tourist bookings remain solid well beyond the typical seasons.

With a record 40,000-plus caravans, camper trailers and motorhomes bought in the Australian market in 2021[2], two preceding years of strong sales in 2019 and 2020, and an up to year-long wait for new orders, demand for tourist sites is unlikely to ease any time soon.

Another growth factor is Australia’s ageing population.

While there are many advantages of having a mixed permanent, annual and tourist site offering, there has been a rise in demand for pure lifestyle community parks. These parks are targeted at retirees who find the combination of affordable housing, great locations and instant community highly appealing. For investors, the attraction is mutual. Lifestyle community parks are typically 100% occupied with long waiting lists, which provides strong, reliable annual returns for investors.

What’s making caravan parks so attractive for investors?

Caravan parks are good income-producing assets, with many generating 50-60% profit on a going concern basis. But perhaps even more importantly for investors, they also represent an outstanding opportunity to bank land in appealing locations while receiving strong returns. Investors also see the ability to pass on rising costs to consumers.

Most large caravan parks are in premium locations, feature strong, positive cash flow and have the potential for growth and expansion. This combination makes them an attractive alternative asset class for institutional investors in particular. This is reflected in the interest and acquisitions of many of the major sector players, such as Ingenia Communities, Tasman Holiday Parks, Aspen Holiday Parks and Hampshire Property Group. They are not alone, as syndicates and private equity firms have also been helping to drive up demand and compress yields over the past 24 months.

Caravan Park

What’s next for this alternate investment asset class?

Between the consumer demand and the investor appetite – including Tasman’s reported[3] aim to double its footprint by the end of 2023 and Ingenia’s well-publicised expansion plans[4] – demand for quality caravan park assets is likely to remain high.

In the last couple of years, investors have benefited from the spread between yields and cost of debt. The only factor that might soften the market is rising interest rates, which may put pressure on some investor’s ability to acquire further holiday and lifestyle parks. But with strong private equity interest that is yet to be tested.

CONTACT

Ryan Danaher

Ryan Danaher

Head of Department – Alternate Investments

If you would like to know how Opteon can assist with Caravan Park, Holiday House and Other Accommodation sector valuations, contact us below.


DISCLAIMER

This article is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax or financial advice.

Liability limited by a scheme approved under Professional Standards

The Value of Green Data in Mortgage Valuations

For lenders and investors, there’s enormous – and often untapped – value in accurate ‘green’ property data. Green property data describes the energy efficiency and sustainability of a building – including the age, measured living area, as well as the building material used to the type of heating, cooling and appliances. Green data can be used in determining energy consumption and provides independent primary data for validation and auditability.

Since NAB issued its first green bond in 2014, demand for sustainable investments has steadily increased. The Sydney Morning Herald1 recently reported “sustainable debt issuance, which also includes green bonds and social bonds, jumped three-fold in Australia and New Zealand last year to $US44 billion”.

Companies are increasingly invested in meeting market expectations around environmental, social and governance (ESG) reporting. According to an Economist Impact report sponsored by Westpac, Financing for sustainability: Inside Asia Pacific’s rapid market growth (the Economic Impact Report),2 new [sustainable finance] products and increasing demand are helping companies and investors make the challenging transition to net zero and fulfil their ESG obligations”.

Both green bonds and ESG reporting are significant market opportunities that rely on accurate green data. However, reliable and up-to-date data is often difficult to source.

Green bonds

According to the Economic Impact Report,2 rising recognition of the urgency to mitigate climate risks and the need to meet the United Nations 2030 Sustainable Development Goals” has fuelled the rapid growth of the Asia Pacific’s sustainable market. Sustainable green bonds are attracting a premium for lenders issuing these securities.

The Climate Bonds Standard and Certification Scheme is a labelling scheme for bonds and loans. It is used by bond issuers, governments, investors and the financial markets around the world to prioritise investments that help address climate change.

The Climate Bond Initiative outlines eligibility criteria3 for green residential buildings with national and state-based requirements. These consider dwelling type, location and other relevant characteristics. State-based requirements align to the relevant building codes and may be eligible with an energy certification, such as NatHERS, Green Star, BASIX Energy 40 or Passive House certification.

The eligibility criteria is intended to evolve over time with the eligibility determined at the time a green bond is issued. As the criteria evolves, weaker proxy data is phased out as more reliable, specific and measurable data becomes available. For example, rooftop solar was eligible under a simplified proxy framework nationally (excluding WA) where financing was confirmed before 30 June 2022. The simplified proxy framework requires less data than the newer criteria, which also considers pools and gas connection.

Environmental, social and governance (ESG) reporting

In 2021, New Zealand became the first country in the world to enact climate change disclosure laws for financial firms. The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 requires approximately 200 large financial institutions to start publishing disclosures in 2023.

In Australia, where ESG reporting remains voluntary, many companies are choosing to disclose their ESG performance to meet a new range of investor, customer, employee and community expectations. For example, ANZ, NAB, CBA, Macquarie and most recently Westpac have joined the NetZero Banking Alliance.4 The Alliance members commit to transition greenhouse gas emissions from their lending and investment portfolios to align with pathways to net-zero by 2050 or sooner. This includes addressing Scope 3 emissions,5 which can include emissions associated with residential mortgages.

Effectively managing and disclosing ESG risks has become a critical governance activity. To comply with continuous disclosure obligations and to avoid misleading and deceptive conduct, it is becoming increasingly important that corporate entities, including lenders, understand the quality of sustainability data in meeting their ESG reporting requirements. Increasing regulatory scrutiny in ‘greenwashing’, or falsely representing a company’s ESG performance, makes it critical directors are relying on accurate data.

Property Valuation

How Opteon can help tap into green asset potential

Opteon’s highly trained valuers inspect over 400,000 residential and commercial properties each year from which primary data is collected, including energy and sustainability-related data. Our independent valuations pass rigorous quality and compliance standards, leading to high quality primary data that can inform green classifications.

Opteon’s inspection data is accessible for portfolio-level analysis and can be used to identify loans that may meet residential and commercial green bonds eligibility criteria. It can also be valuable in determining emissions for ESG reporting purposes.

Using trusted green data is an important aspect of issuing green bonds. Green bonds have been attracting higher rates of returns for investors in wholesale markets, green data enables banks to identify assets in its back-book which are eligible to be securitised. Additionally, green data can be used by banks for determining Scope 3 emissions from the built environment in a bank’s portfolio, data is available historically with richer, more specific data becoming available.

CONTACTS

Scott O’Dell

General Manager – Residential



Ross Turner

General Manager – Commercial

If you would like to know how we can help you identify green loans in your portfolio and capture the value of green data, contact us below.


DISCLAIMER

This material is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax, investment or financial advice.
Liability limited by a scheme approved under Professional Standards Legislation.

Mortgage Report Data Reveals Flood Risks across Australia

Author

Scott O’Dell – General Manager – Residential

It’s not news that Australia has experienced many major flood events over the past two years, particularly along the east coast.

Historically, property values have proved resilient after significant flood events. For example, as reported in the AFR1: “A year after the Lismore floods in 2017, house prices rose 11.5 per cent. Similarly, after floods in the same area in 2020, median house prices surged a record high of 25 per cent from 2020 to 2021.”

Opteon data on property in high risk and medium-high flood risk areas over the past five years supports this trend. In fact, in some areas, high risk properties were worth more than lower risk ones. The value resilience of these properties has been helped by low interest rates, low turnover rates and strong median price growth that has been fueled by the rise of lifestyle factors in purchasing decisions.

However, with 100-year flooding events now occurring with frightening regularity, interest rates rising, a flattening market and housing buyback schemes being discussed for flood-prone lands, it is critical valuers closely monitor flood risks in prone local government areas (LGAs) and remaining vigilant to market sentiment and movements.

Opteon considers environmental issues, including flood risk, in all mortgage reports. We rate properties as being at a high risk of flood where one-in-20 year flood events are predicted to affect a building on the property. We assess properties as being at a medium-high risk of flood where one-in-20 year flood events are predicted to inundate the land but not affect buildings.

Flood Risk Across Australia

High risk

Over the past five years, 1% of all properties Opteon valued for a mortgage report had a high risk of flooding. These are shown by LGA in the map below, with areas with fewer than 50 high risk properties excluded. There was a notable cluster of high-risk areas in southern Queensland.

Properties with High Risk of Flooding by Local Government Area – Map
LGA Map Australia
Medium-high risk

A further 6% of all properties we valued had a medium-high risk of flooding. As shown in the map below, there was again a risk cluster in southern Queensland and risks along much of the east coast. Medium-high risk LGAs were also seen in some parts of north-northwestern Victoria and eastern South Australia.

Properties with Medium to High Risk of Flooding by LGA – Map
LGA map
Riskiest LGA’S

The following table contains the LGAs with the highest percentages of residential dwellings with high flood risk observed in the last five years by Opteon valuers. Areas with fewer than 50 properties recorded at high risk of flooding have been excluded.

Local Government Areas with Highest Flood Risk

Opteon is currently analysing how the regions with medium-high risk are performing compared to regions with lower percentage of flood risk.

Historical flood risk effect on market value

As shown in the table below, in LGAs in metropolitan NSW and QLD with high proportions of properties at high risk of flooding, property values were not significantly affected by flood risk over a five-year window. In fact, properties with a high risk of flooding were often valued more highly than properties with a lower risk. As many of these are water-front properties or located close to waterways, the appeal of the location has often outweighed the flood risk for buyers.

Impact of Flood Risk on Property Value in NSW & Queensland Cities
Low vs high flood risk

However, as we move through the next year it will be interesting to see if these trends continue, especially in some of the regions shown in our graph where multiple significant and, at times, life-threatening floods have occurred in the last two years.

We will be monitoring these regions closely and reporting on the strength of these markets over the next 6-12 months.


Scott O’Dell

General Manager – Residential

We’re here to help answer any questions you might have, contact our property specialists below.


DISCLAIMER

This material is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax, investment or financial advice.
Liability limited by a scheme approved under Professional Standards Legislation.

[1] https://www.afr.com/property/residential/house-prices-in-flood-hit-areas-in-for-a-long-recovery-20220706-p5azgc

Managing Credit Risk Exposures in a Residential Building Boom

Author

Scott O’Dell – General Manager – Residential

The rate of construction of new homes in Australia has increased significantly over the past two years. According to the Sydney Morning Herald 1, Housing Industry Association figures show about 105,000 residential properties were being built before the pandemic. Since then, that number has risen by roughly 80%.

The demand for new houses has been largely attributed to pandemic-associated factors, such as lockdown experiences, low interest rates, increases in savings and various stimulus packages. Unfortunately, the boom coincided with supply chain issues, high freight costs and resource shortages that have contributed to significant inflationary pressures in the construction sector.

According to the ABS Producer Price Index in March 2022, “over the past twelve months, input prices to house construction rose 15.4%, due to timber, board and joinery (+20.6%) and other metal products (+16.2%).”2

Opteon data also reflects this inflationary trend. When we looked at residential properties in greenfield/growth corridor areas surrounding capital cities over the last two years (Q1 2020 to Q1 2022) we saw an increase in construction costs across the board. As shown in the graph below, the cost of new builds increased by 24% in Sydney, 13% in Melbourne and 33-34% in Brisbane and Perth.

Construction Costs Relative to Baseline, Q1 2020
credit-risk-exposures

In the face of higher construction costs, demand is predicted to slow.3 However, lending risks are not.

Managing the risks

In the current market, it is particularly important for lenders to manage credit risk exposures with the construction of new residential properties. The biggest risk is funding a home that is not completed, as unfinished projects damage the value of the security. This can happen when builders become insolvent or due to some contractual arrangements.

When providing Construction Reports (also known as To Be Erected Reports) for loans, Opteon helps address these risks. With every report, we assess contractual issues that heighten the risk for lenders, including the inclusion of rise and fall clauses and front-end load payments. We also look for fixed price contracts that builders are unlikely to be able to honour.

To minimise exposures to insolvency risk, we provide lenders access to our regularly updated, dynamic list of builder/developer insolvencies as they take place, which is currently occurring far too often. We also provide dependable progress inspections for lenders as they release funds across the key stages of construction. This provides a high level of risk mitigation during this tumultuous time for the building industry.


Scott O’Dell

General Manager – Residential

We’re here to help answer any questions you might have, contact our property specialists below.


DISCLAIMER

This material is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s valuers are qualified, experienced and certified to provide market value valuations of your property. Opteon does not provide accounting, specialist tax, investment or financial advice.
Liability limited by a scheme approved under Professional Standards Legislation.